India’s residential prices rise, even as prime global cities record dip in price growth | The Financial Express

India’s residential prices rise, even as prime global cities record dip in price growth

The rise in average prices in Mumbai was recorded at 4.8% year-on-year (YoY), Bengaluru (3.3% YoY) and New Delhi (1.2% YoY) during the 12-month change (Q3 2021-Q3 2022).

India’s residential prices rise, even as prime global cities record dip in price growth
Of the 45 cities tracked, 19 saw prime prices decline between June and September 2022, up from seven in Q1 2022.

Globally, prime price growth dipped for the second consecutive quarter in Q3 2022. According to Knight Frank’s research analysis, the Prime Global Cities Index Q3 2022 recorded an average annual growth of 7.5% in Q3 2022, down from a peak of 10% in Q1 2022.

However, all three Indian cities (Mumbai, Bengaluru and New Delhi) registered an increase in average annual prices in Q3 2022. Mumbai moved up from 39th rank in Q3 2021 to 22nd rank in Q3 2022. Bengaluru and New Delhi too witnessed an upward movement in index ranking from 41th rank and 38th rank, respectively, in Q3 2021 to 27th rank and 36th rank, respectively, in Q3 2022.

The rise in average prices in Mumbai was recorded at 4.8% year-on-year (YoY), Bengaluru (3.3% YoY) and New Delhi (1.2% YoY) during the 12-month change (Q3 2021-Q3 2022). Some of the factors supporting price growth are strong market sentiment, adequate affordability, still low interest rates compared to 2019 and a much more stable economy and business environment relative to many developed economies.

The Prime Global Cities Index is a valuation-based index tracking the movement in prime residential prices in local currency across 45+ cities worldwide using Knight Frank’s global research network.

However, even at 7.5%, annual growth still sits above the index’s average five-year growth rate of 4.4%, and the number of cities registering year-on-year price falls has only shifted from six last quarter to seven this quarter.

But dig deeper and the quarterly data reveals a marked slowdown. Of the 45 cities tracked, 19 saw prime prices decline between June and September 2022, up from seven in Q1 2022. Those markets that registered some of the strongest price rises during the pandemic are well represented amongst this group: San Francisco, Toronto, Wellington, Stockholm, Vancouver, Los Angeles, Seoul, as well as some Chinese mainland cities. In prime central London (2.7%) prices are now rising at their fastest rate since Q1 2015. Meanwhile, in New York, the rate of annual growth has dipped to 5.2% from 7.1% last quarter, but it remains well above its average rate of growth over the last five years of -1.2%.

THE KNIGHT FRANK PRIME GLOBAL CITIES INDEX Q3 2022

(RANKED BY ANNUAL % CHANGE)

The strong performance of some European cities is likely to reflect seasonal demand over the summer, but also a degree of safe haven capital flight. Zurich (10.7%), Edinburgh (9.9%), Berlin (9.4%), Dublin (8.6%) and Madrid (5.6%) have all risen up the rankings in the last 12 months despite the drop in sentiment and the slowdown in the Eurozone’s economy.

The report further cited that Dubai recorded the fastest rise in prime prices with 88.8% increase during a 12-month change (Q3 2021- Q3 2022) while Wellington was the weakest performing market with a decline of 18%.

Mumbai witnessed a prominent upward movement in index from 39th rank in Q3 2021 to 22nd rank in Q3 2022. Bengaluru and New Delhi also moved up from 41th rank and 38th rank respectively in Q3 2021 to 27th and 36th rank respectively in Q3 2022.

Commenting on the same, Shishir Baijal, Chairman and Managing Director at Knight Frank India, said, “India continues to distinguish itself as one of the most resilient large economies of the world and market sentiments remain strong. While increasing mortgage rates have weighed down prime residential markets globally, the Indian prime residential market has been relatively strong and should be able to sustain the momentum till the end of 2022.”

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First published on: 29-11-2022 at 14:11 IST